Automotive

Looking for some Leasebuster Lease Take Over Tips

  • Last Updated:
  • Jan 15th, 2019 12:25 pm
[OP]
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Apr 21, 2004
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Looking for some Leasebuster Lease Take Over Tips

If I'm looking at a leased vehicle to take over that is withing the original factory warranty with the intention of buying the vehicle at lease end, what are some of the things I have to keep in mind? Of course those asking for a down payment are out to lunch and I would never consider responding to those listings unless they had put down a huge down payment (and who does these days?).

Questions from the top of my head:
  1. What are some things to look out for that are not covered by the factory warranty? I know tires, wiper blades, bulbs are excluded but are there any big items subject to wear and tear that could also be excluded?
  2. How can I tell if the car has been in an accident; is a carfax report almost 100% fool-proof unless repair was done without reporting to insurance company?
  3. If I want to play safe and wanted to have the above two things inspected/certified (no major accidents / no parts that will be excluded from warranty work / legit VIN), how much would a dealership charge me for the inspection?

I'm also wary that some private sellers are really curbsiders but then wouldn't the lease contract be under their name or can the lessee assign the obligation to these folks?

Would appreciate any other tips or advice.
21 replies
[OP]
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Leasing or financing takeover (upon credit approval) seems to be two ways to defer paying the entire tax on a vehicle.
Newbie
Jun 13, 2016
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Why would you buy a leased vehicle at the end, in the end its only more expensive most of the time.
[OP]
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^ Thanks for your comment. Can you explain how these can be more expensive if the original lessee got a good deal and they offer some cash back?

Because payments have been made towards the vehicle (cheaper than buying new) and lease rates are probably lower than what you can get at any financial institution? I think auto loans in Canada are at least 6% per annum.

I'm not saying I cannot save enough money to buy the car outright but taking over a lease makes it a little more financially flexible.

I wouldn't even consider these take overs for European cars, probably just Honda, Toyota, Mazda and Nissan. Mazda does come with unlimited mileage for 2015 and over and is transferable to the new owner.
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Apr 30, 2009
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I am looking for new car myself and every time I compare prices on the same type and model on lease busters and brand new from dealership, it seem to be more expensive to get the leased car. You can't avoid taxes on the top of monthly payments, so no tax savings here. The residual at the end of the term is taxable as well (if I remember correctly) and then there are fees associated with closing the lease at the end of term.

If I am wrong, will be happy to see correct information
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Jan 8, 2007
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golden_m wrote:
Aug 31st, 2017 1:57 pm
I am looking for new car myself and every time I compare prices on the same type and model on lease busters and brand new from dealership, it seem to be more expensive to get the leased car. You can't avoid taxes on the top of monthly payments, so no tax savings here. The residual at the end of the term is taxable as well (if I remember correctly) and then there are fees associated with closing the lease at the end of term.

If I am wrong, will be happy to see correct information
If you're taking over a lease on lease busters and comparing to a new car there is no way the lease busters can be more money. It's a used car compared to a new one.

If you're comparing new lease to new finance, most of the time the two will be very similar if you compare over same term. So if you're leasing for 4 years and give it back/sell it yourself, and finance for 4 years and sell at that same time, you're coming out in a wash...

Now if you're leasing, then buying out and refinancing at a higher rate, then it is probably better to finance from the start. However leasing has its advantages like if you get into a crash, no worries about reduced value, if you don't like the car, it's easier to just give it back. Smaller payments also mean you can invest your extra cash and possibly make more return than your lease interest rate.
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Feb 9, 2003
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Langley
In my unscientific analysis, 99% of the cars on leasebusters are bad deals. But I'd have to imagine its possible to find a car in the 1%.
Newbie
Jan 28, 2017
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Markham
i6s1 wrote:
Aug 31st, 2017 2:30 pm
In my unscientific analysis, 99% of the cars on leasebusters are bad deals. But I'd have to imagine its possible to find a car in the 1%.
This. Been on and off looking for a car on the site and what I've found (rough napkin math) is that most people who post ads on leasebusters paid full msrp and didn't negotiate any terms.
[OP]
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i6s1 wrote:
Aug 31st, 2017 2:30 pm
In my unscientific analysis, 99% of the cars on leasebusters are bad deals. But I'd have to imagine its possible to find a car in the 1%.
bear20 wrote:
Aug 31st, 2017 2:51 pm
This. Been on and off looking for a car on the site and what I've found (rough napkin math) is that most people who post ads on leasebusters paid full msrp and didn't negotiate any terms.
I am not in the market for one yet but I noticed that for two 2016 Mazda CX-3's, they were around $26-27k all in (taxes on monthly payments and the residual value) and a brand new 2017/18 one would have been at least $31-32k (before negotiations). The 2018 has the adaptive cruise control, smart braking system and heated steering wheel though.

The shorter the amortization periods left the better because the original lessee would have already paid a significant chunk of the vehicle but with low interest offers extending to seven or eight years, it's difficult to find three-year old or newer models with two years left to pay down. There will be a few but it might not be on makes/models that we'd be interested in. Also longer terms usually come with higher lease rates.

For those 2010 Mazda models I saw that have a few payments to go, I doubt they will be good deals because the warranty is long gone and one might be on the hook for expensive repair costs. Why would they want someone to take over their lease when they only have a few months left to pay down? My spidey sense is tingling. :)

I'll stick with leased cars that are within the warranty period, at least for now, and on which I can still buy extended warranty.

=====

I forgot with Honda's, we can get extended warranties (YMMV depending on dealerships) as long as the car is below 100k.
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Aug 2, 2004
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East Gwillimbury
I think LeaseBusters has great deals.

I used them once, I found a woman in Montreal that was desperately trying to get out of her lease on a Mazda 6, the mileage was low and she offered me a cash incentive to take over her lease. She paid all the fees and drove to Toronto with her boyfriend to drop off the car.

She bought a car with $2000 cash down payment, but a few months later, she graduated from school, got a job as an ambulance driver and moved in with her boyfriend. She didn't need the car. It was parked for a year and only had ~6000 kilometres on it. 3 years remaining on the lease. She had it posted on LeaseBusters for a few months with no takers. Mainly because it was a 5 speed.

I nabbed it, and after the cash incentive, the effective payment was $240 plus tax and I had 34 months of payments. At the end of the term, I returned the car to a local dealer and leased something else. I didn't go back to LeaseBusters, but in hindsight, I should have.
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Jul 12, 2003
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ottlife91 wrote:
Aug 31st, 2017 12:19 pm
Why would you buy a leased vehicle at the end, in the end its only more expensive most of the time.
Not always true.

The KM could be very low at end of the lease and way below the km allowance. The person want to take advantage of it and drive it for longer as the car is in top shape.

I bought out a lease at the end after I sub lease it for 2 years. I drove 30km a day only to work and left me tons of KM at the end. The car is in top shape, the initial lesse put a downpayment on it, he throw in the winter tires for it which I can still use them for years after I bought out the lease. I owned the car few more years after I bought it out until I sold it last year privately.

In certain case, it can be better off to return the car and lease a new one, but each scenario is different.
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My anecdotal experience has been similar, I haven"t seen any deals.
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As your intention is to buy out the lease, you should look for a lease that is nearing the end of the term to save interest. I would stay away from long term leases and look for something that still has some warranty on it. Be wary of any modifications that may have been made to the vehicle, as this is in violation of the lease agreement and while you are still within the lease, you will always have the option to return the vehicle instead of buying it out.
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aleks wrote:
Aug 31st, 2017 2:18 pm
If you're taking over a lease on lease busters and comparing to a new car there is no way the lease busters can be more money. It's a used car compared to a new one.

If you're comparing new lease to new finance, most of the time the two will be very similar if you compare over same term. So if you're leasing for 4 years and give it back/sell it yourself, and finance for 4 years and sell at that same time, you're coming out in a wash...

Now if you're leasing, then buying out and refinancing at a higher rate, then it is probably better to finance from the start. However leasing has its advantages like if you get into a crash, no worries about reduced value, if you don't like the car, it's easier to just give it back. Smaller payments also mean you can invest your extra cash and possibly make more return than your lease interest rate.
Maybe i am missing something here, but let's try to look into numbers.
Here is a listing of a car that i am interested in - 2017 Rav4 AWD XLE - link to 2017 RAV4 XLE AWD
Toyota.ca price (no negotiation, just the MSRP) is $33.000 (before taxes)
Leasebusters listing gives the following numbers:
monthly payments (before taxes): $396
remaining months: 54
buy out at the end: $14.674 (before tax)
total: $36.058

can someone explain how this vehicle with 16000 KM on it is more expensive than brand new car???

P.S. Toyota also has $1000 incentive on brand new 2017, which makes it even better deal compared to the leasebusters listing
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golden_m wrote:
Aug 31st, 2017 11:50 pm
Maybe i am missing something here, but let's try to look into numbers.
Here is a listing of a car that i am interested in - 2017 Rav4 AWD XLE - link to 2017 RAV4 XLE AWD
Toyota.ca price (no negotiation, just the MSRP) is $33.000 (before taxes)
Leasebusters listing gives the following numbers:
monthly payments (before taxes): $396
remaining months: 54
buy out at the end: $14.674 (before tax)
total: $36.058

can someone explain how this vehicle with 16000 KM on it is more expensive than brand new car???

P.S. Toyota also has $1000 incentive on brand new 2017, which makes it even better deal compared to the leasebusters listing
You would need to go into a dealer and spec a Rav4 exactly as the one in the ad to compare. Just quickly going through the ad and building the same one on Toyota.ca I get $36,076 before HST.

MSRP + Freight + PDI + Air Conditioning Charge + OMVIC and Enviro Fees + Block Heater + Remote Start that's listed in the ad. I haven't added the admin fee which varies by dealer. Now this person may have added other dealer accessories, warranties, etc. They also took the 64 month lease 10 months ago, which means the 2017 just came out so the lease rate is probably very high. Leasing at 64 months adds thousands of $ in interest charges. So you can't compare a cash deal to lease/finance.

My recommendation is to keep looking. This is a very bad deal done by someone not versed in leasing, or else I would want a lot more than $800 to take this lease over.

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